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How Do Natural Disasters Affect U.S. Small Business Owners?

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Abstract

Recent research has linked climate change and socioeconomic inequality (see here, here, and here). But what are the effects of climate change on small businesses, particularly those owned by people of color, which tend to be more resource-constrained and less resilient? In a series of two posts, we use the Federal Reserve’s Small Business Credit Survey (SBCS) to document small businesses’ experiences with natural disasters and how these experiences differ based on the race and ethnicity of business owners. This first post shows that small firms owned by people of color sustain losses from natural disasters at a disproportionately higher rate than other small businesses, and that these losses make up a larger portion of their total revenues. In the second post, we explore the ability of small firms to reopen and to obtain disaster relief funding in the aftermath of climate events.

Suggested Citation

  • Martin Hiti & Claire Kramer Mills & Asani Sarkar, 2022. "How Do Natural Disasters Affect U.S. Small Business Owners?," Liberty Street Economics 20220906a, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:94729
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    More about this item

    Keywords

    climate risk; small business; minority-owned business; disaster relief; inequality; Sandy; credit;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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